When a corporation issues its capital stock in payment for services, the least appropriate basis for recording the transaction is the
A) market value of the services received.
B) par value of the shares issued.
C) market value of the shares issued.
D) Any of these provides an appropriate basis for recording the transaction.

Question

Quizplus · Accepted Answer

The par value of the shares issued is not an appropriate basis for recording the transaction because it merely represents the minimum amount for which the shares can be issued and has no relation to the fair value of the services received. The market value of the services received or the market value of the shares issued would provide a more accurate basis for recording the transaction.

When a Corporation Issues Its Capital Stock in Payment for Services